Moody's lowers Frontier Drilling

Moody's Investors Service said it downgraded Frontier Drilling ASA's corporate family rating to Caa2 from B3, the probability of default rating to Caa3 from B3, the first secured credit facilities to B2 (LGD2, 10%) from B1 (LGD2, 28%) and second-lien senior secured term loan to Caa3 (LGD3, 32%) from Caa1 (LGD5, 73%).

The ratings remain under review for possible further downgrade, the agency said.

The Caa2 CFR reflects the increased liquidity pressures resulting from the lower than expected earnings and cash flows from the Duchess coming off contract work earlier than expected and the company's election to accelerate planned shipyard work for the Duchess, the planned dry docking of the Seillean vessel in June and yet another set of larger than expected cost overruns for the drillship Phoenix upgrade, Moody's added.

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